Changes in Hungarian legislation regarding real estates Term: January-September 2018

The year 2018 has brought many changes in the legislation of Hungary regarding real estates. There were many aspects that motivated the change in legislation, the most prominent of which were the social goals of the lawmakers like the state’s right of pre-emption, the increase of the security of real estate transactions, and the reform of the territorial administration for quicker and more efficient processes.

The extension of the State’s right of pre-emption (right of first refusal)

From December 2017, the scope of the state’s right of pre-emption has been expanded.

The amendment of Act 64 of 2001. on the protection of cultural heritage grants a primary right of pre-emption for the state, if the area or the real estate can be protected as cultural heritage, and such protection is declared by an amendment regulation.

The amendment of the Act 77 of 2011. on the world heritage, which came into force in December 2017 has expanded the scope of the state’s right of pre-emption to real estates on UNESCO world heritage locations, which was explained by the achievement of the goals set out in the world heritage treaty. Such world heritage locations include the banks of the Danube, the Castle District of Buda, Andrássy street and many rural area locations, such as the Old Village of Hollókő.

The UNESCO world heritage locations are listed in annex 1. of the Government regulation nr. 455/2017. (XII. 27.).

For any real estates that are subject to the amended legislation, the state registrates its right of pre-emption to the land registration. The authority designated by the Government contacts the real estate authority for the registration. Habitations (flats, residential properties) are exempted from the state’s right of pre-emption.

The security of real estate transactions

Act 78 of 2017. on the activity of attorneys-at-law changed the rules of countersigning, increased the level of security of documents, and made the land registration processes based on such documents more secure.

§ For the sake of increasing the secuirty of business transactions, the attorney-at-law is obliged to verify the documents of the clients and their proxies through the data provision system (in Hungarian abbreviated as “JÜB”), and is obliged to keep a record of such verification.

§ The attorney at law is also obliged to verify all documents about the rights regarding real estates.

§ If the contract was signed in a foreign country, it is possible to verify the signatures by consular superlegalisation or by a notary public.

Changes regarding the land-register and fees

The amendment of Act 141 of 1997 on the land-register which came into force on the 1st January 2018 erased the possibility of filing the application at government offices, thus making the filing only possible at the land-registration offices on paper.

According to the amendment of the Act 93 of 1990 on fees which came into force on 1st January 201. the value of the flat sold within 3 years prior to- or within 1 year after the sale and purchase, may be deducted from the base of calculation of the fee, provided that the acquirer is a natural person.

Changes of Act 102 of 2011 on the regulated real-estate investment companies

The amendment nr. T/625. which passed on the 20th July 2018, regulates the companies registered on the stock exchange (real-estate investment companies) the activity of which covers acquisition, operation and development of real estate acquired by using the funds of investors.

The main purpose of the amendment was to limit the scope of activities of such companies to the above mentioned activity, securing the payment of the income for the investors. The development and organizing of the projects regarding the construction of buildings is considered an exception from the regulation as long as it is not paired with actual construction activities, which can only be performed by a separate, „outsider” building contractor. The amendment makes it possible for the project companies under its scope to perform activities regarding non-residential properties as well.

Let us know if you have any question in regards of the various real estate transactions we deal with via clicking here

2018-10-03, Real estate